7/23/2023 0 Comments Stacks crypto price![]() Temporarily locking up STX for bitcoin rewards to support the Stacks blockchain’s network security and consensus sounds an awful lot like ordinary staking that is common with a consensus mechanism called Proof-of-Stake. At the same time, a Stacks staker needs to provide his Bitcoin address to receive funds from block-proposing miners. This means: As a STX holder, one can register for a rewards cycle by broadcasting a signed message that locks up one’s STX coins for a defined lockup period. Without Proof-of-Transfer, the question is: Where do the Bitcoin units go that miners need to send in order to participate in Stacks’ block production? The receivers are Stacks stakers. Since Stacks block rewards also halve every four years for three consecutive periods, these Stacks “halvings” are synchronized with Bitcoin halvings. 125 STX per block are released from then on indefinitely.250 STX per block are released during the following 4 years.500 STX per block are released during the following 4 years.1,000 STX per block are released in the first 4 years of mining after the mainnet launch.The compensation is issued by the protocol in STX, Stacks’ native blockchain coin. Compensation is also similar to Bitcoin as it is provided in the form of block rewards and transactions fees from the Stacks network. Since this approach incurs costs for Stacks miners, they are compensated accordingly. But instead of using energy to produce new blocks, Stacks miners use bitcoin - that they need to buy at the market rate - to maintain the Stacks blockchain. In a sense, Stacks’ consensus mechanism is mimicking Bitcoin’s Proof-of-Work mechanism. However, the probability of being chosen increases with the amount of bitcoin a miner transfers to the list of Bitcoin addresses. Whichever miners get to produce a block is ultimately decided by sortition. Only by transferring Bitcoin to a predetermined randomized list of Bitcoin addresses can blocks be produced within the Stacks blockchain. So, in Stacks’ case, miners that want to mine Stacks’ native coin (STX) and participate in consensus need to send a Bitcoin transaction (containing Bitcoin units) to predefined Bitcoin addresses. With Proof-of-Transfer, this mechanism is slightly amended: The cryptocurrency used is not burned (i.e., destroyed) but distributed to a set of participants that help secure the new chain. It is their way of proving that they have incurred costs for proposing new blocks. With Proof-of-Burn, miners that participate in the consensus algorithm burn a cryptocurrency of an already established blockchain (by sending it to a burn address). Proof-of-Transfer is an adaptation of Proof-of-Burn (PoB), which was originally proposed as a consensus mechanism for the Stacks blockchain. Via this consensus mechanism, Stacks is tethered to Bitcoin by settling all Stacks transactions on Bitcoin. The key concept behind Stacks and its relation to Bitcoin is its unique consensus mechanism called Proof-of-Transfer (PoX). Various projects nowadays claim that they are building on top of Bitcoin and they all seem to be doing it differently. This way, Stacks’ entire transaction and state history is unequivocally represented on the Bitcoin base layer. This transaction records the hash of a respective Stacks block and makes sure that the Stacks block is unambiguously anchored within a block on the Bitcoin blockchain. In order to create any Stacks block, a Bitcoin transaction has to be initiated on the Bitcoin blockchain itself. In more technical terms one could say: Stacks’ entire state settles on Bitcoin. The connection to Bitcoin is established as follows: The Stacks blockchain uses the Bitcoin base-layer blockchain as a reliable storage and broadcast medium, meaning that everything that happens on Stacks (the transaction history compiled in Stacks blocks) is recorded on Bitcoin itself. Contrary to different Bitcoin sidechains, Stack’s coin (STX) is not pegged to on-chain BTC. The project has its own nodes, its own network, its own miners as well as its own coin. While this goal might be similar to that of Bitcoin sidechains, drivechains, or second-layer solutions, being a layer-1 blockchain itself, Stacks has a unique way of achieving this. In contrast to commonly known smart-contract blockchains like Ethereum, Cardano, Solana, or Avalanche, Stacks is associated with the Bitcoin ecosystem because it aims to enhance Bitcoin’s capabilities by building on top of it. ![]() Stacks is a layer-1 blockchain that allows for the execution of smart contracts.
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